What Student Loan Deferment Means for You
COVID-19 has everyone on edge. The pandemic has forced businesses and schools to close, and it seems to be spreading at an alarming rate. This also means that their student loan payments are deferred for some people. If you’re one of those people, it’s essential to understand you can make the best decision for your financial future without ultimately not paying your student loan.
How Borrowers Can Take Advantage of Suspended Interest Rates.
The U.S. Department of Education (USDE) recent announcement on the 0% student loan interest rate, loan repayment suspension, and temporary halting the collection of defaulted student loans was a great relief to many students. However, you can take advantage of temporarily suspended interest rates for your good. This could be excellent news for those struggling to make payments on their loans. Here’s what you need to know and take advantage of the offer while it last with no future regrets:
1. Making Payments on the Principal Balance
Gradually making payments on the principal balance will help reduce the amount of money you owe in interest over the life of your loan. Furthermore, you will build a credit score despite the challenging economic times, which can be helpful in future financial plans.
2. Targeting Specific Loans
Although all of your loans may have a slightly different interest rate, you can save yourself money in the long run by focusing on the higher-interest ones. Try to make at least the minimum payment on each loan every month, but put extra funds towards those with the highest rates. This is especially important if you anticipate paying off your loans before the end of their term.
3. Continuing to Pay Despite Not Having Mandated Monthly Payments
Some lenders only require borrowers to make a certain number of payments before the loan is paid in full. This can benefit those who want to get out from under their debt as soon as possible and add more interest fees over time. Although it may seem easier just not making any monthly payment, this should be avoided if possible to enhance your credit score.
